Why Renewable Energy Is Now the Cheapest Power: Renewables vs Coal, Gas and Nuclear

For building new generation, yes. CSIRO and AEMO’s GenCost 2025–26 final report, released in July 2026, found that renewables backed by storage remain the lowest-cost way to build Australia’s future electricity system. IRENA’s Renewable Power Generation Costs in 2025 report, also from July 2026, found more than 90% of new utility-scale renewable projects worldwide came in cheaper than the cheapest new fossil-fuel option.

That’s a claim about the cost of building new power stations — not about what shows up on your Aurora bill. The two are related, but loosely, and we’ll get to why.

Which type of new power station is cheapest to build?

GenCost estimates the cost of new-build electricity in 2030 in 2025 Australian dollars per megawatt hour. These figures are before the extra cost of firming (storage and backup) and new transmission:

New-build technology	GenCost estimate, 2030 (A$/MWh)
Large-scale solar	$29–76
Onshore wind	$64–107
Gas	$108–184
Black coal	$113–191
Large-scale nuclear	$187–312
Small modular nuclear reactors	$336–546

Globally, IRENA puts average costs at US$44/MWh for solar PV, US$33/MWh for onshore wind and US$78/MWh for offshore wind. Different currencies and different methods, same direction of travel.

Why has renewable energy become so cheap?

Three reasons, and none of them are complicated.

There’s no fuel to buy. Sunlight and wind arrive free. A coal or gas plant has to purchase fuel every day for its entire life.
Equipment prices have collapsed with mass manufacturing. IRENA reports that since 2010 the cost of solar has fallen 89%, onshore wind 71% and offshore wind 63%. Four-hour battery storage sits around US$140/kWh — roughly 95% below 2010.
Fossil kit has gone the other way. GenCost records gas-turbine costs rising four years running.

IRENA estimates renewables avoided about US$480 billion of fossil-fuel costs in 2025. It also notes the cost falls are now levelling off, so it’s fair to assume the dramatic price drops of the 2010s won’t simply repeat.

Doesn’t storage and transmission wipe out the savings?

Integration costs are real and GenCost counts them. It estimates a fully firmed renewable system in 2050 at $141–152/MWh including new transmission, or $120–130/MWh without it.

The honest comparison is that in 2050 no new-build option of any kind is estimated under $100/MWh — new coal lands at $107–182/MWh. There is no cheap option waiting in the wings. These are modelled estimates, not fixed prices, and they’ll move as the world changes.

So why hasn’t my power bill fallen?

Because generation is only about a third of a typical retail electricity bill. GenCost puts generation at roughly 33%, distribution networks at about 34% and transmission at about 7%, with retail costs and other charges making up the rest.

Tasmania is a clean example. Aurora Energy’s standing offer rose 4.23% on 1 July 2026, and the regulator said higher network charges accounted for almost all of that increase. Cheap generation does not automatically mean a cheap bill — poles, wires and substations have to be paid for regardless of what’s generating at the other end.

Where does Tasmania already sit?

Further ahead than most places on earth. Renewables supplied 97.5% of Tasmania’s electricity generation in calendar 2025. The Tasmanian Economic Regulator reports the 2024–25 mix as roughly 72–73% hydro, about 21% wind and about 3% gas.

So a Tasmanian household isn’t installing solar to clean up the grid — that job is largely done here. You’re installing it for a much more ordinary reason: to buy less electricity at retail prices.

What does cheap renewable energy mean for my own roof?

This is where the national picture and your bill finally meet. Aurora’s regulated solar feed-in tariff is 9.276 c/kWh from 1 July 2026 (up from about 8.8c), while importing power costs roughly 28–30 c/kWh. Using your own solar is worth about three times as much as exporting it.

Practically, that means self-consumption is the whole game. Run the dishwasher, washing machine, pool pump and hot water in the middle of the day. Charge the EV at home in daylight if you can.

Your tariff matters too:

Tariff 93 (residential time-of-use) is the default — since 1 July 2024 every new or upgraded residential connection is assigned to it. It’s whole-of-home, with peak on weekdays 7–10am and 4–9pm (8–11am and 5–10pm during daylight saving). Everything else, including all weekend, is off-peak.
Tariff 31 (flat general light and power) and Tariff 41 (separately metered lower flat rate for hard-wired heating and hot water) are the legacy pair, closed to new installations on 30 June 2024. Existing homes may stay on them. Neither is time-of-use.
Tariff 97 is the new opt-in residential CER tariff for homes with solar, a battery or an EV. It’s the only one with a super off-peak rate — midnight to 4am every day, weekends included. Its peak runs weekdays 7–10am and 4–10pm (an hour longer in the evening than Tariff 93), all other times are off-peak, and it carries an excess demand charge above 8.5 kW. Whether a Tariff 97 plan is available to you depends on your retailer.

How big a system makes sense, and what about a battery?

For most homes that will electrify over time — EV, heat pump, induction cooktop — around 13kW of panels on a 10kW inverter (the 133% inverter oversizing rule) is a sensible, future-proof default, and a step up from the old 6.6kW standard. TasNetworks allows a 10kW single-phase inverter in Tasmania, so most homes don’t need to pay for three-phase. The federal STC rebate discounts the upfront cost, with Tasmania in STC Zone 4.

Discussion of solar payback in Tasmania commonly lands somewhere around four to six years, and longer for a battery — but that depends entirely on your usage, tariff, roof and pricing, so treat any figure as indicative rather than a promise. A genuinely low-use home with no battery, EV or electrification plans may be better served by something smaller.

On batteries, be clear-eyed. The federal Cheaper Home Batteries Program (from 1 July 2025) takes roughly 30% off an eligible battery — around $250 per usable kWh in 2026 at the full rate for the first 14 kWh, then 60% of that rate for 14–28 kWh and 15% for 28–50 kWh, capped at 50 kWh. It tapers each year to 2030, the battery must be paired with solar, and eligibility conditions apply. There is no separate Tasmanian state battery rebate.

Tasmania’s relatively cheap power and fair feed-in tariff mean a battery generally pays back more slowly here than on the mainland. No vendor or retail VPP program operates in Tasmania, though wholesale-price exposure does exist through spot-passthrough retailing — and automated battery control can charge when spot prices go negative and avoid peak-time imports. Solar Generation runs exactly that setup on its own systems. For a typical household on Aurora tariffs without spot exposure, the realistic value is self-consumption plus backup during outages.

The practical takeaway

If you remember one thing: the cheapest kilowatt hour you’ll ever have is the one you generate and use yourself, in the same hour, on your own roof. Everything else — tariffs, batteries, national cost curves — is detail arranged around that fact.

So before you spend anything, do these four things:

Pull out a recent bill and find your tariff number (31, 41, 93 or 97). It changes every calculation that follows.
Work out when you actually use power. If most of it is after dark, shifting loads into daylight is free money before any hardware is bought.
Write down what you plan to electrify in the next five years. That, not today’s usage, should size the system.
Check whether your retailer offers a Tariff 97 plan before assuming a battery or EV will suit it.

This guide is written by the Tasmanian solar team at Solar Generation Tasmania, who are always happy to answer a question from a fellow Tasmanian trying to make sense of it all.

#solargentas #solargen #solargenerationtasmania

Published by Solar Generation Tasmania. General information current as at publication — rebates, tariffs and prices change, so confirm current figures before deciding.